Question: Explain how the CAPM provides a simple rationale for the fol lowing portfolio strategy: Diversify your holdings of risky assets according to the pro portions

Explain how the CAPM provides a simple rationale for the fol lowing portfolio strategy: Diversify your holdings of risky assets according to the pro
portions of the market portfolio;
Mix this portfolio with the risk free asset to achieve a desired
risk-return combination

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